Spokane and Seattle are the only two cities from Washington to enter the challenge. Portland and Minneapolis also applied.

The U.S. Department of Transportation will award up to $40 million to a city or region with a plan to use data-driven ideas and advanced transportation technologies “to reduce congestion, keep travelers safe, protect the environment, respond to climate change, connect underserved communities and support economic vitality.”

The department issued the challenge in December, following its report last year, “Beyond Traffic,” which identified challenges the country faces in transportation infrastructure.

Spokane’s application builds on work already being done in the University District by the city, Avista, Itron, McKinstry and Washington State University. While still largely conceptual, the project is intended to give the existing “living laboratory a boost,” said Kim Zentz, who led the city’s grant-writing process.

“The whole thing about smart cities is it’s where all systems come together,” said Zentz, director of engineering and technology management at WSU’s Voiland College of Engineering and Architecture. “Either they work well or they don’t. It’s a system of systems.”

Spokane’s application proposes electrifying the city’s transit system, quadrupling Avista’s plan to build 265 vehicle-charging stations throughout the city, and enhancing the Spokane Transit Authority’s Central City Line, an electric fixed-route trolley that would run between Browne’s Addition and Spokane Community College.

“We’re trying to build on what’s already going on,” Zentz said. “What would it take for me to use electric vehicles or electric bikes or the transit line to move around town?”

Transportation Secretary Anthony Foxx said the challenge was part of a nationwide effort to spur innovation. Last month, Foxx announced $4 million in federal investments dedicated to driverless car technology and infrastructure.

“We are very impressed by the response by community leaders across the country,” Foxx said in a statement. “This challenge is going to do more than just help one city adopt innovative ideas. Instead, it will serve as a catalyst for widespread change in communities across America.”

The Transportation Department grant will be matched with $10 million from Paul Allen’s company Vulcan Inc., which is intended to reduce carbon emissions by supporting electric vehicles. Additionally, Mobileye said it would outfit the fleet of the winning city’s transit system with some driverless vehicle technology.

Allen co-founded Microsoft and lives in Seattle.

Five finalists will be chosen next month to hone their ideas. The cities will be awarded $100,000 and have until May to submit more detailed applications. The winner will be chosen in June.